Capability Measuring Of Enterprises Mergers And Acquisitions

Mergers and Acquisitions is an eternal topic on capital market. A lot of companies have become strong by mergers and acquisitions. However, it do not often happen, successful cases are minority statistically. A majority of mergers and acquisitions failed. That leaves us asking a question that used to seem overlooked:under the similar external conditions and motivations, why some companies are successful in mergers and acquisition while others fail in mergers and acquisitions. Based on enterprises resource-based view theory and organization capability theory, we consider the defect of the capability of mergers and acquisitions is the basic reason of the failure of mergers and acquisitions.However, very little literature has focused on the capability of mergers and acquisitions, especially lacks the study of definition, structure and impact factors based on a systematic theory. As a result, we put forward a comprehensive S-RPL analytical framework based on the dynamic capability theory and self-organization theory. Then we give a definition of capability of mergers and acquisitions.Firstly, dynamic capability theory overcomes the shortcomings of the static state of RBV and inherent rigidity of the core competence theory. It emphasizes the dynamic allocation and intergartion of resources that adapt itself to dynamically changing environment. Mergers and acquisitons are complicated behaviors that reallocate company’s resource frontier in the dynamic changing environment. Therefore, M&A capability is a kind of dynamic capability basically which adapt to the analytical framework of dynamic capability theory. Secondly, the analytical framework could be classified into three groups as the Renew group, the process group and the study group. Their common characteristic is that, on the one hand, emphasizes the importance of resources. On the other hand, it regards resources as static, resource can take competitive advantages unless it is allocated and integrated by dynamic capability. The concrete forms of capability are routines and processes. However, it is also important to point out that, dynamic capability is the highest level of enterprise capability. Its structure is multi-level and multi-dimension and its impact factors are depent. Therefore, dynamic capability belong to the category of self-organization. Combined dynamic capability theory with self-organization theory, we put forward a comprehensive S-RPL analytical framework. Under this framework, we define mergers and acquisitions capability. Mergers and acquisitons capability is a self-organazation which improve the value of mergers and acquisitions, based on the slack resources.Under the S-RPL framework, mergers and acquisitions capability has two intensions. The first impact factor is the slack resources which mergers and acquisitions needs. The slack resource means the extra resource that surpass the needs of usuall operations. Slack resource is the material fundament of mergers and acquisitions. Specifically, it includes financial slack resource and hunman slack resource. The second impact is mulit-level and multi-demensional system which includes target identification capability, trading capability and Renew capability. Each system can be classified into subsystems. In accordance with the charactor of self-organazition, the subsystems of mergers and acquisitions capability are not independent which influence with each other. Under the synergy and competence of the subsystems, mergers and acquisitions capability envolves consistently which take enterprises with competitive advantadges.Mergers and acquisitions has three main impact factors. Firstly, the external environment influence the formation of mergers and acquisitions capability, including industry factors, policy factors and macro economy. The second is the experience which influence the gain, spread and share of the knowledge of mergers and acquisitions. Knowledg is the micro-foundation of the development of dynamic capability. Therefore, M&A experience is positively related with the formation of M&A capability. Abundant M&A experience can improve company’s value greatly. The third factor is enterprises leader characteristic. China’s enterprise’s operation is determined by the personal quality of leader. The leader often determines the M&A strategy which influence the formation of M&A capability. Finally, based on the sample of China’s listed firms’mergers and acquisition from2007to2011, we measure the M&A capability. We put forward a "Resource-Capability-Performance" analytical framework which takes slack resources as input and M&A performance as output. Using data envelop analysis, we use the trsformation efficiency as the measurement of M&A capability. This measuring method avoids the shortcomngs of the formal measurement of M&A capability and provide a better solution.